Asian equity markets have extended a global slide and Europea stocks are on track for their worst week this year as tension ramped up between the United States and North Korea, sending investors fleeing to less risky assets such the yen and the Swiss franc. Silvia Antonioli reports.
It has been a year of record highs... But stock markets have taken their first real beating this week. Asian shares fell the most since mid-December and European equities are on track for their worst week of the year Worsening geopolitical tension is a main culprit. SOUNDBITE (English) DAVID MADDEN, CMC MARKETS, MARKET ANALYST "The heightened political tensions between Donald Trump and the North Korean state has really sent shivers down the spines of traders. And we've seen a major sell off in global equity markets. But even before we had the escalation of tensions between North Korea and the United States we are already seeing signs of divergence. Of course what's going on in Southeast Asia at the moment has really just ramped up the rate of selling. " U.S. President Donald Trump told North Korea on Tuesday he would respond to any threat with "fire and fury" To which Pyongyang replied it was planning a missile attack on a U.S. base in the Pacific. Trump then cranked up the pressure by saying he hadn't been tough enough yet. All in all, global equity markets have lost nearly 1-trillion-dollars since the fire and fury comment. And as fear returned, volatility in the U.S. and Europe jumped. But there were others factors at play in Europe too. l SOUNDBITE (English) DAVID MADDEN, CMC MARKETS, MARKET ANALYST "The pushing higher of the euro particularly against the US dollar and the British pound has seen traders take their cash out of Euro Zone equity markets. Traders are all are also worried that Mario Draghi could potentially be talking about the reduction of the bond buying scheme that the ECB has in place ." It's not all doom and gloom though. Gold, the yen and the swiss franc are benefiting from the risk-off mood. Also a bright spot in Europe was drugmaker Galapagos which defied the pessimistic mood after a successful drug trial.